Vail Resorts reported results that were in line with expectations in the fiscal third quarter ended April 30 although its net earnings guidance was lowered due to an accounting adjustment for its Park City resort lease. Season pass sales for the upcoming 2023/2024 North American ski season are off to a promising start, increasing 6 percent in units and 11 percent in sales dollars through May 31.

Highlights

  • Net income attributable to Vail Resorts, Inc. was $325.0 million for the third fiscal quarter of 2023 compared to net income attributable to Vail Resorts, Inc. of $372.6 million in the same period in the prior year. The decrease in net income attributable to Vail Resorts, Inc. compared to the prior year is primarily attributable to an increase in expense associated with a change in the estimated fair value of the contingent consideration liability related to its Park City resort lease.
  • Resort Reported EBITDA was $623.3 million for the third quarter of fiscal 2023 compared to Resort Reported EBITDA of $610.5 million in the same period in the prior year.
  • The company updated its fiscal 2023 guidance range and is now expecting net income attributable to Vail Resorts, Inc. to be between $251 million and $283 million and Resort Reported EBITDA to be between $837 million and $853 million. (Previously, net income attributable to Vail Resorts Inc. was projected between $282 million and $328 million and Resort Reported EBITDA between $831 million and $859 million.)
  • Pass product sales through May 30, 2023 for the upcoming 2023/2024 North American ski season increased approximately 6 percent in units and approximately 11 percent in sales dollars as compared to the period in the prior year through May 31, 2022. Pass product sales are adjusted to eliminate the impact of changes in foreign currency exchange rates by applying current U.S. dollar exchange rates to both the current period and prior period sales for Whistler Blackcomb.
  • The company repurchased approximately 1.8 million shares during the quarter at an average price of $225.01 for a total of approximately $400 million and declared a quarterly cash dividend of $2.06 per share of Vail Resorts common stock that will be payable on July 12, 2023 to shareholders of record as of June 27, 2023.

Commenting on the company’s fiscal 2023 third-quarter results, Kirsten Lynch, CEO, said, “We are pleased with our overall results for the quarter and for the 2022/2023 North American ski season, with strong growth in visitation and spending versus the prior year. After the challenges experienced in the second quarter of fiscal 2023 driven by weather disruptions in Tahoe and across our Midwest, Mid-Atlantic and Northeast resorts (collectively Eastern U.S. resorts), the results in March and April improved as expected, with strong demand from local and destination guests, driving visitation and resort net revenue above prior year record levels. Favorable conditions enabled an extended season at resorts across Utah, Tahoe, and the Northeastern U.S., while some resorts in the Midwest and Mid-Atlantic regions closed earlier than originally intended due to unseasonably warm weather and lack of terrain.

“Our results throughout 2022/20 North American ski season highlight both the stability resulting from the advance commitment from season pass products and our strong operational execution through the season. The winter season included significant weather-related challenges related to travel disruptions over the peak holiday period, abnormal weather variability across our Eastern U.S. resorts, and significant storm-related disruptions at our Tahoe resorts. Despite these weather events, the company grew visitation, resort net revenue and Resort Reported EBITDA to record levels, supported by the stability created from our advanced commitment strategy, and a strong finish to the season with good spring conditions at our resorts in Colorado, Utah, Tahoe and the Northeastern U.S. Our ancillary businesses, including ski school, dining, and retail/rental, experienced strong growth compared to the prior year period, when those businesses were impacted by capacity constraints driven by staffing, and in the case of dining, by operational restrictions associated with COVID-19. Staffing levels enabled our mountain resorts to deliver a strong guest experience resulting in a significant improvement in guest satisfaction scores, which exceeded pre-COVID-19 levels at our destination resorts.”

Regarding the outlook for fiscal 2023, Lynch said, “The strong finish to the season produced Resort Reported EBITDA results that were in line with our expectations, and we now expect net income attributable to Vail Resorts, Inc. for fiscal 2023 to be between $251 million and $283 million, and Resort Reported EBITDA for fiscal 2023 to be between $837 million and $853 million.”

Lynch continued, “Our balance sheet remains strong and the business continues to generate robust cash flow. We remain focused on returning capital to shareholders and are very pleased to announce that the company repurchased approximately 1.8 million shares during the quarter at an average price of $225.01 for a total of approximately $400 million and declared a quarterly cash dividend of $2.06 per share of Vail Resorts common stock that will be payable on July 12, 2023 to shareholders of record as of June 27, 2023.”

Operating Results
Mountain Segment

  • Total lift revenue decreased $4.7 million, or 0.7 percent, compared to the same period in the prior year, to $710.1 million for the three months ended April 30, 2023, primarily due to a decrease in North American pass product revenue, partially offset by an increase in non-pass lift ticket revenue. Pass product revenue, although primarily collected prior to the ski season, is recognized in the Consolidated Condensed Statements of Operations throughout the ski season on a straight-line basis using the estimated skiable days of the season to date relative to the total estimated skiable days of the season. For the quarter, pass product revenue decreased 3.6 percent, which was primarily driven by the timing of recognition of pass product revenue as a result of the prior year’s impact of delayed resort openings due to challenging early season conditions in the 2021/2022 North American ski season and early resort openings in the current 2022/2023 North American ski season. This variability in resort opening dates resulted in a pass product revenue decrease of approximately $40 million for the three months ended April 30, 2023 compared to the three months ended April 30, 2022, and represents a timing difference that offset with its second quarter of fiscal 2023. The decrease in pass product revenue due to the timing of revenue recognition was partially offset by an increase in pass product sales for the 2022/23 North American ski season. Non-pass product lift revenue increased 3.2 percent, driven by an increase in non-pass Effective Ticket Price (ETP), excluding Andermatt-Sedrun, of 13.0 percent, as well as incremental revenue from Andermatt-Sedrun of $7.4 million, partially offset by a decrease in visitation driven by early resort closures at its Mid-Atlantic and Midwest resorts as a result of unfavorable weather conditions in the region, as well as a continued increase in the conversion of guests from non-pass lift ticket purchases into advance commitment pass product purchases.
  • Ski school revenue increased $24.2 million, or 20.0 percent, dining revenue increased $21.9 million, or 27.4 percent, and retail/rental revenue increased $8.5 million, or 6.7 percent, each primarily driven by the greater impact of COVID-19 and related limitations and restrictions in the prior year, including staffing challenges which limited its ability to operate at full capacity, as well as increased skier visitation which drove additional demand for ancillary products and services.
  • Operating expense increased $48.9 million, or 10.0 percent, which was primarily attributable to investments in employee wages and salaries, as well as increased variable expenses associated with increased revenue, the impact of inflation and incremental expenses associated with Andermatt-Sedrun.
  • Mountain Reported EBITDA increased $10.9 million, or 1.8 percent, for the third quarter compared to the same period in the prior year, which includes $4.9 million of stock-based compensation expense for the three months ended April 30, 2023 compared to $5.1 million in the same period in the prior year.

Lodging Segment

  • Lodging segment net revenue, excluding payroll cost reimbursements, for the three months ended April 30, 2023 increased $1.0 million, or 1.2 percent, as compared to the same period in the prior year, primarily due to increases in ancillary and other revenue, partially offset by a reduction in revenue from the DoubleTree at Breckenridge hotel, which we sold after the 2021/22 ski season.
  • Operating expense, excluding payroll cost reimbursements, decreased $0.9 million, or 1.2 percent, which was primarily attributable to a reduction in variable expenses from the DoubleTree at Breckenridge hotel.
  • Lodging Reported EBITDA for the three months ended April 30, 2023 increased $1.9 million, or 12.8 percent, for the third quarter compared to the same period in the prior year, which includes $0.9 million of stock-based compensation expense for both three months ended April 30, 2023 and 2022.

Resort
(combination of Mountain and Lodging segments)

  • Resort net revenue increased $61.7 million, or 5.2 percent, compared to the same period in the prior year, to $1,238.3 million for the three months ended April 30, 2023.
  • Resort Reported EBITDA was $623.3 million for the three months ended April 30, 2023, an increase of $12.8 million, or 2.1 percent, compared to the same period in the prior year.

Total Performance

  • Total net revenue increased $61.8 million, or 5.2 percent, to $1,238.4 million for the three months ended April 30, 2023 as compared to the same period in the prior year.
  • Net income attributable to Vail Resorts, Inc. was $325.0 million, or $8.18 per diluted share, for the third quarter of fiscal 2023 compared to the net income attributable to Vail Resorts, Inc. of $372.6 million, or $9.16 per diluted share, in the third quarter of the prior year. The decrease in net income attributable to Vail Resorts, Inc. compared to the prior year is primarily attributable to an increase in expense associated with a change in the estimated fair value of the contingent consideration liability related to its Park City resort lease.

Return Of Capital
Commenting on capital allocation, Lynch said, “Our balance sheet remains strong. Our total cash and revolver availability as of April 30, 2023 was approximately $1.5 billion, with $896 million of cash on hand, $420 million of U.S. revolver availability under the Vail Holdings Credit Agreement and $208 million of revolver availability under the Whistler Credit Agreement. As of April 30, 2023, our Net Debt was 2.3 times the trailing twelve months Total Reported EBITDA. The company repurchased 1,777,730 shares at an average price of $225.01 for a total of approximately $400.0 million during the quarter, representing 4.4 percent of the company’s outstanding stock as of the beginning of the third quarter. We have approximately 1.8 million shares remaining under our authorization for share repurchases and remain focused on returning capital to shareholders while always prioritizing the long-term value of our shares. Additionally, the company declared a quarterly cash dividend on Vail Resorts’ common stock of $2.06 per share. The dividend will be payable on July 12, 2023 to shareholders of record as of June 27, 2023. We will continue to be disciplined stewards of our capital and remain committed to prioritizing investments in our guest and employee experience, high-return capacity expanding capital projects, strategic acquisition opportunities and returning capital to our shareholders through our quarterly dividend and share repurchase program.”

Season Pass Sales
Commenting on the company’s season pass sales for the upcoming 2023/24 North American ski season, Lynch said, “We are pleased with the results for our season pass sales to date with continued unit growth over the strong pass sales results we saw last spring. Pass product sales through May 30, 2023 for the upcoming 2023/24 North American ski season increased approximately 6 percent in units and approximately 11 percent in sales dollars as compared to the period in the prior year through May 31, 2022. Pass product sales are adjusted to eliminate the impact of foreign currency by applying an exchange rate of $0.74 between the Canadian dollar and U.S. dollar in both periods for Whistler Blackcomb pass sales.”

Lynch continued, “Relative to season-to-date pass product sales for the 2022/2023 season, the company achieved strong unit growth among renewing pass holders. The company successfully grew units across destination, international and local geographies, with the strongest unit growth in destination markets, particularly in the Northeast, and across all major pass product segments, with the strongest product growth in regional unlimited pass products and Epic Day Pass products as lower frequency guests and local Northeast guests continue to be attracted by the strong value proposition of these products. Pass sales dollars are benefiting from the 8 percent price increase relative to the 2022/2023 season, partially offset by the mixed impact from the growth of Epic Day Pass products. While pass results to date have been strong, we still have the majority of our pass selling season ahead of us, and given our efforts to drive more guests to purchase passes in the spring, we expect the full-year pass sales growth rate may moderate relative to our spring growth rate. We will provide more information about our pass sales results in our September 2023 earnings release.”

Regarding Epic Australia Pass sales, Lynch commented, “We are pleased with ongoing sales of the Epic Australia Pass, which end on June 14, 2023 and are up approximately 16 percent in units through June 1, 2023, as compared to the comparable period through June 2, 2022. These passes provide an advance commitment for this winter in Australia but also provide advance commitment from Australian guests for our North American ski resorts for the 2023/2024 winter season.”

Introduction Of My Epic Gear
Commenting on the company’s March announcement, Lynch said, “We are pleased to be piloting My Epic Gear at Vail, Beaver Creek, Breckenridge and Keystone for a limited number of pass holders during the 2023/24 North American ski season, which will introduce a new membership program that provides the best benefits of gear ownership but with more choice, lower cost and no hassle. My Epic Gear provides its members with the ability to choose the gear they want, for the full season or for the day, from a selection of the most popular and latest ski and snowboard models, and have it delivered to them when and where they want it, guaranteed, with free slopeside pickup and drop off every day. In addition to offering the best skis and snowboards, My Epic Gear will also offer name-brand, high-quality ski and snowboard boots with customized insoles and boot fit scanning technology. The entire My Epic Gear membership, from gear selection to boot fit to personalized recommendations to delivery, will be at the members’ fingertips through the new My Epic app.

“My Epic Gear will officially launch ahead of the 2024/25 winter season at Vail, Beaver Creek, Breckenridge, Keystone, Whistler Blackcomb, Park City Mountain, Crested Butte, Heavenly, Northstar, Stowe, Okemo and Mount Snow. Further expansions are expected in future years.”

Updated Outlook

  • Net income attributable to Vail Resorts, Inc. is expected to be between $251 million and $283 million for fiscal 2023.
  • Resort Reported EBITDA is expected to be between $837 million and $853 million for fiscal 2023.
  • Resort EBITDA Margin is expected to be approximately 29.2 percent in fiscal 2023 at the midpoint of its guidance range.
  • The updated outlook for fiscal year 2023 assumes a continuation of the current economic environment, normal weather conditions and operations throughout the Australian ski season and North America summer season, both of which begin in its fourth quarter, and no material impacts associated with COVID-19. It is important to note that there continues to be uncertainty around the economic outlook and the impact that may have on travel and consumer behavior.
  • The guidance assumes an exchange rate of $0.75 between the Canadian dollar and U.S. dollar related to the operations of Whistler Blackcomb in Canada, an exchange rate of $0.67 between the Australian dollar and U.S. dollar related to the operations of Perisher, Falls Creek and Hotham in Australia, and an exchange rate of $1.10 between the Swiss Franc and U.S. dollar related to the operations of Andermatt-Sedrun in Switzerland. Relative to its original September 2022 guidance, we estimate the movements in exchange rates will result in a fiscal 2023 guidance impact of approximately negative $5 million for Resort Reported EBITDA.